As the pandemic is gradually put under control and the government is tweaking fiscal and monetary policies to make them more flexible and targeted, we expect China’s economic to continue to recover and the growth driver to shift more from external to internal in 2022. We expect mainland China’s GDP to grow 5.2% in 2022.

In particular, we anticipate 10 trends for macro economy next year:

  1. The COVID-19 pandemic and quarantine policies will continue to be key factors determining the pace of China’s economic recovery;
  2. Inflation should remain under control, with the gap between CPI and PPI expected to narrow;
  3. Consumption in China continues to pick up and domestic brands rise in popularity;
  4. Manufacturing investment, especially in innovative and green sectors, will see rapid growth;
  5. Real estate regulation is expected to continue but the key policy objective is to stabilize the market and expectations;
  6. Export growth will likely moderate and trade surplus will narrow;
  7. Foreign direct investment remains strong, while outbound investment is expected to rebound;
  8. ESG is becoming a core focus for businesses, and decarbonization regulations are expected to be implemented more systematically;
  9. Supply chain strategies focus more on resilience and ability to mitigate risks;
  10. Global economic recovery remains uneven, with widening divergence among economies.